KARACHI: Federation of Pakistan Chambers of Commerce and Industry (FPCCI) President Mian Nasser Hyatt Magoo on Wednesday blamed the Federal Board of Revenue (FBR) for not responding to the apex body’s budget proposals despite the fact that Prime Minister Imran Khan had issued directions to the revenue body for examining these in terms of agreed, non-agreed and partially-agreed proposals.
“Two follow-up meetings were held with the finance minister and the FBR in which it was assured that the budgetary suggestions along with the tax model presented by the FPCCI would merit consideration. However, the FPCCI suggestions have not been incorporated in the budget while certain measures announced in the budget are partly reflective of our proposals,” Mr Magoo said during a post-budget press conference at the Federation House.
“Our proposed tax model was based on a simple, fair and predictable tax system. This included 10 per cent income tax on individuals and association of persons, 20pc income tax on companies, single-stage 5pc sales tax (for exporters zero per cent tax), low rate customs duty (one chapter, one rate 5pc on all items, with 15-20pc tariff protection for local industry) and FED only on luxury and hazardous products,” he said.
Mr Magoo highlighted the gravity of the issues arising due to the introduction of Section 203A and that too in the presence of already available provisions being overlooked in this regard by the means of Section 192A and other appropriate associated sections with regards to inevitable need to arrest the taxpayer on account of civil liability. He asked for deletion of this provision on immediate basis to put the agitated businessmen at rest.
On the issue of inclusion of retailers in the definition of smuggling, the FPCCI chief said that better and effective enforcement to disable the supply of smuggled goods to retailers was required instead of leaving the retailers at the mercy of inspection agencies/FBR.
He demanded withdrawal of the proposed Section 127 of Income Tax Ordinance 2001 which has made filing of appeal contingent upon depositing 100pc disputed tax amount. “This is against the right to fair trial in terms of Section 10A of the Constitution of Islamic Republic of Pakistan that guarantees a person to be entitled to fair trial and due process,” he said. Mr Magoo further proposed omission of Section 140 in the field of Income Ordinance by which FBR would be entitled to withdraw initial stage disputed amount from taxpayer’s bank accounts, stating that it did not provide the determined civil rights and obligations for a fair trial and due process.
“New introduction of penalties and confiscation of goods due to not accompanying the invoice list in the container does not match with the ongoing claims of excluding human interaction in clearance of goods and payment of taxes,” the FPCCI chief said. He added that the present trade includes different destinations of negotiations and transshipment and origins of goods in which the process and procedure of exporting destination may not accommodate such provision of putting invoice in the containers, hence, this proposal in the budget should be withdrawn.
He also demanded that the tax audit by third party may be proposed in the statutes with pre-determined audit parameters and mechanism to ensure transparency and be exclusive to the market and FBR interest.
The FPCCI president also proposed that the Office of the Federal Tax Ombudsman (FTO) may be considered to be assigned third party tax audit — as FTO is exclusive to any market interest because it is a constitutional office — on a one-time basis assuring the transparency in conducting the tax matters of taxpayers aggrieved at the hands of tax officials.
FPCCI Vice President Nasir Khan demanded that Schedule 6th and 8th should be reviewed for restoring the exemptions on food items. Distortions in sales tax treatment in respect of plant and machinery for different industrial sectors should be done away with and all the plant and machinery for production should be exempted from sales tax, he added.
On FATA/PATA exemptions, Mr Khan said the mechanism of exemptions should be structured in such a way that exempted goods may not become another source of smuggling to the tariff area.
Former FPCCI president and Convener FPCCI Budget Committee Zakaria Usman said the wrong decision of imposition of CNIC conditions on sale has been counterproductive resulting in misuse of ID cards and development of fake and flying invoices culture. This is not the way of broadening the tax and hence should be withdrawn in order to increase unconcealed business activities, he said.
Mr Usman strongly demanded the FBR to share draft list of proposed additional custom duty and regulatory duty in the draft SROs so that anomalies can be arrested before their issuance.
Published in Dawn, June 17th, 2021